Midas Reports 2001 Fourth Quarter and Full-Year Earnings
ITASCA, Ill.--Feb. 21, 2002--Midas, Inc. today announced its results for the fourth quarter and the full year ended December 29, 2001.For the fourth quarter 2001, Midas reported a net loss of $0.18 per share, after special charges of $0.20 per diluted share. In the 2000 fourth quarter, Midas reported a net loss of $0.10 per share, after special charges of $0.32 per share. Excluding these special charges, Midas earned $0.02 per share compared with $0.22 per share, for the respective quarters. For the full year 2001, Midas reported earnings of $0.85 per share after the $0.20 per share fourth quarter charges, or $1.05 before the special charges, compared with $1.96 a year ago, which included non-recurring gains of $0.47 per share offset in part by the $.32 per share of special charges.
"In 2001, we took many of the steps needed to rebuild Midas' foundation for increased profitability and growth," said Wendel H. Province, Midas' chairman and chief executive officer. "Underpinning that foundation are Midas' broad strengths: a remarkably strong consumer brand franchise, attractive opportunities for reinvesting available cash flow, untapped distribution capacity for automotive products and services, and further potential for operational efficiencies. We have defined the development of these strengths as the New Midas strategy."
Province continued, "Our results for 2001 reflected the challenges experienced by most retailers, particularly in the third and fourth quarters; heavier than normal investment in information technology; start-up costs related to the PWI network of quick-delivery sites; investment to add company shops, and streamlining and restructuring costs that will reduce future overhead.
"In addition, there were several milestones that suggest our New Midas strategy is gaining traction in the marketplace. Comparable store retail sales for Midas shops in North America increased 1.5 percent in the fourth quarter. For the full year, comparable store sales, despite a lower third quarter, were slightly higher than last year, the first positive comp sales comparison since 1996. We achieved this result by adding new maintenance services that significantly increased the value that a Midas location can offer to its customers. The new services already represent nearly 25 percent of the revenues of a typical U.S. Midas shop, and are growing," Province noted.
At the company's dealer convention held last week in Las Vegas, Midas unveiled a new advertising campaign, introduced a new tire program, and detailed a series of branding initiatives that will be launched in the months ahead. "Midas and its network of franchisees remain focused on programs that enhance the New Midas market position," said Province. "Our initiatives, combined with the significant progress made during 2001 in providing just-in-time delivery for parts and the comprehensive new technology conversion for shops and distribution centers, gives us confidence that the foundation for growth is solidly in place."
Fourth Quarter Performance
Sales and revenues for the fourth quarter of 2001 were $78.0 million, up from $74.9 million in 2000. During the fourth quarter, Midas acquired 72 Midas shops in Florida and Colorado from franchisees, bringing the total number of company-operated shops to 108. All but 10 of the shops were acquired in 2001.
At the end of the fourth quarter, there were 74 Parts Warehouse, Inc., (PWI) quick-delivery sites in operation. PWI provides just-in-time delivery of parts to Midas and non-Midas professional installers. The company added a net of six sites in the fourth quarter. It began the year with 29 sites.
In the fourth quarter, Midas recorded after-tax special charges of $2.9 million, or $0.20 per share. Included were $1.4 million of after-tax charges for a reduction in force, eliminating 65 positions in corporate headquarters and in the field, which will result in annual savings of more than $4.3 million. The balance of the charge was to write off impaired assets. In fourth quarter 2000, Midas recorded after-tax special charges of $4.8 million, or $.32 per share, for a special early retirement program and to increase the allowance for bad debts.
Full-Year Performance
Sales and revenues for the full-year were $328.0 million, down from $346.2 million in 2000. The revenue decrease reflects the continuing decline of the automotive aftermarket for exhaust systems, partially offset by the new products and service offerings in Midas shops, the sales growth experienced by PWI, and the recently acquired company owned shops.
Midas reported 2001 full-year earnings of $12.6 million, after the effects of the special charges in the fourth quarter. Earnings per diluted share for the year were $1.05 before the charges and $.85 after the charges. For the full-year 2000, Midas reported earnings of $30.5 million, or $1.96 per share. In addition to the fourth quarter charge of $0.32 per share, full-year earnings were affected by non-operating gains of $7.4 million or $.47 per share. Excluding special charges and non-operating gains, earnings for 2000 were $1.81 per share.
Diluted earnings per share in the fourth quarter of 2001 are based on 15.0 million outstanding shares, compared to 15.1 million in 2000. Full-year 2001 earnings per share are based on 14.9 million shares, compared to 15.5 million in 2000.
In 2001, Midas generated $47.6 million of EBITDA (excluding the fourth quarter charge), which supported investments in capital improvements, the expansion of PWI, and the acquisition of company-owned shops.
Outlook for 2002
"Our priorities for 2002 are to continue to provide franchisees with resources and programs to drive sales and improve profitability, as well as to complete the integration of our 108 company shops," Province said.
"We also plan to refine the New Midas strategy, and, importantly, to reduce our overall debt level," said Province. "As a result, Midas does not intend to add a significant number of company shops and PWI sites in 2002.
"Midas is now positioned for the changing nature of the marketplace and ready to meet the growing needs of our customers. We have made significant investments in systems, inventories, a new management team and other critical elements of our infrastructure," added Province. "We see further opportunities in 2002 to enhance Midas operations and expect revenues, earnings and cash flow to improve as the New Midas emerges from the restructuring and repositioning actions completed to date."
Midas is one of the world's largest providers of automotive service, offering exhaust, brake, steering and suspension services, as well as batteries, climate control and maintenance services at 2,700 franchised, company-owned and licensed Midas shops in 19 countries, including nearly 2,000 in the United States and Canada.
NOTE: This news release contains certain forward-looking statements that are based on management's beliefs as well as assumptions made by and information currently available to management. Such statements are subject to risks and uncertainties, both known and unknown, that could cause actual results, performance or achievement to vary materially from those expressed or implied in the forward-looking statements. The company may experience significant fluctuations in future results, performance or achievements due to a number of economic, competitive, governmental, technological or other factors. Additional information with respect to these and other factors, which could materially affect the company and its operations, is included in the company's filings with the Securities and Exchange Commission, including the company's 2000 annual report on Form 10-K.
MIDAS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In millions, except for earnings and dividends per share)
(Unaudited)
For the quarter For the year
ended fiscal December ended fiscal December
--------------------- ---------------------
2001 2000 2001 2000
---- ---- ---- ----
(13 Weeks) (13 Weeks) (52 Weeks) (52 Weeks)
Sales and revenues $ 78.0 $ 74.9 $ 328.0 $ 346.2
Cost of sales and revenues 39.2 41.8 173.8 190.0
Selling, general,
and distribution expenses 40.9 33.1 125.1 111.1
-------- -------- -------- --------
Operating
income (loss) ( 2.1) - 29.1 45.1
Interest expense ( 2.4) ( 2.0) ( 9.0) ( 8.1)
Other income, net 0.1 - 0.5 4.1
-------- -------- -------- --------
Income (loss)
before taxes ( 4.4) ( 2.0) 20.6 41.1
Income taxes (benefit) ( 1.7) ( 0.6) 8.0 10.6
-------- -------- -------- --------
Net income (loss) $ ( 2.7) $ ( 1.4) $ 12.6 $ 30.5
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Earnings per share:
Basic $ ( .18) $ ( .10) $ .85 $ 1.98
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Diluted $ ( .18) $ ( .10) $ .85 $ 1.96
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Dividends per
common share $ .00 $ .02 $ .08 $ .08
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Average number of shares
Common shares outstanding 14.9 15.1 14.9 15.4
Equivalent shares on
outstanding stock options .1 - - .1
-------- -------- -------- --------
Shares applicable
to diluted earnings 15.0 15.1 14.9 15.5
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MIDAS, INC.
RESULTS OF OPERATIONS
Fourth Quarter 2001 Compared with Fourth Quarter 2000 (Unaudited)
The following is a summary of the Company's sales and revenues for
the fourth quarter of fiscal 2001 and 2000, respectively: ($ Millions)
Percent Percent
2001 to Total 2000 To Total
-------- -------- -------- --------
Replacement parts sales $ 41.6 53.3% $ 48.3 64.5%
Company-operated shop
retail sales 12.0 15.4 1.7 2.2
Royalties and license fees 14.5 18.7 14.9 19.9
Real estate rental revenues 9.4 12.0 9.7 13.0
Other 0.5 0.6 0.3 0.4
-------- -------- -------- --------
Sales and revenues $ 78.0 100.0% $ 74.9 100.0%
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Year Ended Fiscal December 2001
Compared with the Year Ended Fiscal December 2000 (Unaudited)
The following is a summary of the Company's sales and revenues for
the years ended fiscal December 2001 and 2000, respectively: ($
Millions)
Percent Percent
2001 To Total 2000 to Total
-------- -------- -------- --------
Replacement parts sales $ 203.1 61.9% $ 234.4 67.7%
Company-operated
shop retail sales 19.9 6.1 5.8 1.7
Royalties and license fees 65.2 19.9 65.5 18.9
Real estate rental revenues 38.0 11.6 39.2 11.3
Other 1.8 0.5 1.3 0.4
-------- -------- -------- --------
Sales and revenues $ 328.0 100.0% $ 346.2 100.0%
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